New Sheriff in Town

President Bush reminded Ford & GM that President Carter is writing poetry, building houses and comforting tyrants -- and that he will not be as quick to bail either firm out as our 39thpresident did for Chrysler. "I have been very reluctant -- I'm mindful of the past where at one point in time, a predecessor of mine was faced with that same dilemma," he said. "I would hope I wouldn't be asked to make that decision."

This from a WSJ (News Page) report of an Oval office interview, where the president was cool to the idea of intervention.

Asked if the government should take any pre-emptive action, he said: "I think it's very important for the market to function." He suggested he felt optimistic about the companies' prospects.

The auto industry's struggles could become a big political issue in this year's midterm elections and beyond, especially in Midwestern states such as Michigan and Ohio, where much of the industry's manufacturing base is located. Ford and GM plan to cut at least 60,000 jobs over the next few years, and the fallout could ripple across the auto-supply industry as well, whether or not the companies ever seek bankruptcy protection. While resisting a bailout could cost Republicans support among some voters, it also would serve to shore up their support among those who favor free-market solutions.

This blog has been rough on the GOP of late. I take this and the recent nominations of Chief Justice Roberts and presumptive-Associate Justice Alito as signs that we voted for the right guys (all but Silence anyway...).

Rather than shovel money at the failed business models of the two firms, this president will use their difficulties as a springboard to push market-based reforms of health care. Life is good.

Economics and Markets Posted by jk at January 26, 2006 11:18 AM